Environmentally-conscious readers will no doubt be aware of the controversies surrounding Monsanto. If there ever was a poster child for The Evils of Big Ag(riculture), Monsanto would be it. Heavy pesticide use. Genetically modified organisms. Terminator seeds. Monoculture. As if things were not bad enough with environmentalists already, Monsanto also has to deal with the next generation of food consumers who are generally more picky about what they eat. Largely unfamiliar with agriculture, millennials are susceptible to being swayed mostly by overwhelmingly negative press about modern agriculture.

Given such a scenario, think about being a millennial tasked with generating positive PR for Monsanto. Whereas most wouldn't go near the company without a hazmat suit, NPR has a fascinating interview with Vance Crowe, "director of millennial engagement" over at Monsanto. Here are some Q&As:

You have an interesting job title. How did the job come about, and when did you start?

It's
been pretty clear for a long time that Monsanto has been really good at
talking to and selling seeds to farmers and talking to Wall Street
about our progress and growth. But in between those two poles
are consumers, and the company didn't have a robust strategy for talking
to them. It's clear consumers have some strong feelings about how food
should be produced and what sustainability is. And the tenor has gotten
kind of loud.

If you are a big company, you can't take a piece
of poster board and say, "We're open to talking!" You have to have a
plan for where the conversation is going on, and how to engage. The
company decided it would find somebody to join the conversation in ways
it might not naturally think of. I started in June.Why exclusively millennials? Is there a director of boomer engagement, too?

Millennials
are looking to how they're going to fit into the economy and culture,
and they have a new set of ideas that need to be incorporated into all
aspects of global life. We use the term "millennial," but it really has
to do with new ideas out there, and listening to them.

How is Monsanto's conversation with millennials different from how it might engage with other groups?

In
the U.S., many people living in cities are several generations away
from farms. Monsanto is clear that millennials in cities are paying
attention to where food comes from, but that they don't have a direct
connection to farming the way that generations in the past did. One
of the things we have a connection with is farmers. We are trying to
invite farmer customers to come to places and actually meet people and
talk about their stories and how Monsanto is helping them solve some of
their challenges.

While GMOs are not as ostracized in the US as they are in Europe--nearly all corn and soy in America is now of the GM variety--these are not permanent victories. There are propositions in left-leaning states like Oregon and Colorado for a GMO labeling law to be passed. (Which, if I may say, would be redundant in the case of the plentiful corn- or soy-containing foodstuffs since almost all will have GMO content.) Regardless of where you fall on the GMO debate--as a scholar of world development, I remain keen on its potential to increase productivity and help alleviate hunger--attitudes of next-generation consumers will be interesting to watch as to whether GMOs and Monsanto by implication survive and thrive.

It is hard to dislike the aim of socialism--egalitarianism in resource distribution among the plenty. However, years and years of experience with these regimes from the Soviet Union and all sorts of Marxist-Leninist offshoots demonstrates that, in practice, the opposite holds true. In China, for instance, the Communist Party elite--ostensibly the vanguard of the proletariat--hardly paved the way for more equitable distribution of wealth but merely concentrate political-economic power in the hands of a few. It's the same story nearly everywhere you go.

The most notable current experiment in mounting a holy war against all things capitalist is Venezuela where the same rhetoric is evident: self-styled "champions of the people" expropriate all and sundry businesses by accusing them of hoarding and manipulating. A few months ago we had the tragicomic example of toilet paper making the country the butt of jokes internationally On a related note, we now have baby's diapers:

The falling oil prices that are
providing relief to drivers around the world threaten to bring more
misery to the life of Milagro Alvarez and millions of other Venezuelans,
whose country depends almost exclusively on oil revenue. The math
teacher has been getting up before dawn each day and rushing out to hunt
for disposable diapers, one of scores of products that have been in
short supply due to price restrictions and currency controls put in
place by the socialist government long before the slide in petroleum
prices.

"The government says
we're a rich country, so why do we have to stand in line and beg to buy
diapers?" said Alvarez, standing under a pink umbrella to protect
herself and her 5-month-old daughter Annabeth from the blazing sun after
three hours queued up in front of a Farmatodo store. Now Venezuela is suddenly a lot less rich, and many fear those lines will just get longer.

It is perhaps the ultimate indignity to have to scour stores for dipeys, but that's what's happening in the country that ostensibly has the world's largest petroleum reserves. As things get worse as fuel prices drop, Venezuela is trying to prove running dogs of capitalism wrong that default is inevitable. (This strikes me as odd since the whole point of waging global class warfare is to expropriate the expropriators as per Marx's famous dictum.) Anyway...

The government has called for an
emergency summit of the Organization of Petroleum Exporting Countries
to discuss cutting production to raise prices — a position that could
face opposition by other cartel members. But
it has given no hint of how it will make up for the revenue loss in the
meantime. President Nicolas Maduro has assured Wall Street that the
country won't default on its debt and has told poor Venezuelans that
their social benefits are safe. "There'll
be no catastrophe or collapse," Maduro said last week. "Venezuela has
guaranteed all the resources it needs to keep prospering."

There is also the accusation that, price and currency controls aside, hard up officials and military men are actually among those responsible for creating these shortages:

President Nicolas Maduro's government said on Thursday it had taken over warehouses around Venezuela crammed with medical goods and food that "bourgeois criminals" were hoarding for speculation and contraband. The socialist government says businessmen and wealthy opponents are trying to sabotage the economy
to bring Maduro down, while also seeking to make profits from hoarding,
price-gouging and smuggling across the border to Colombia.Critics
say 15 years of failed policies of state intervention are to blame for
the OPEC nation's widespread shortages, high inflation and apparently
recessionary economy. They accuse nouveau riche officials and military officers of illegal business practices...Critics say Venezuela's security forces have been
at the heart of the trade for years, and contend contraband will not go
away as long as state subsidies and exchange controls create price
disparities offering tempting opportunities.

I foresee a violent reprisal against Maduro and his fellow nutters, but I am less certain that they will succeed. In the end, you create your own hell voting for such riffraff in the first place. Once entrenched, well, they're pretty hard to remove.

PBoC guv'nor Zhou Xiaochuan, second most powerful person in the world?

If you were to be reborn as a global power broker, chances are you'd choose being Zhou Xiaochuan going by the numbers alone. Yet it is a lot less glamorous than it sounds waking up each morning with $3.89 trillion to play with. You'd think the world's your oyster as you make Norway's sovereign wealth fund look like a pipsqueak, but no, it's not that simple. The People's Bank of China (PBoC) is not an independent central bank after all. Nor does it have enough human capital in comparison to commercial fund management concerns in the West:

But there are limits as well. A government-affiliated institution is
not a real company. It can never establish an efficient corporate
governance structure as a real company, and its incentive mechanism will
never be as effective. There are not enough people managing the
forex reserve. Foreign experience shows that every employee in big,
global investment institutions manage on average $500 million to $800
million worth of assets. There are slightly more than 500 people on
SAFE’s forex reserve management team. That means every one of them
oversees about $8 billion worth of assets.

Nevertheless, a particularly interesting phenomenon is that of Chinese forex reserves falling $100 billion in the most recent reporting period. It is being characterized as a "record drop" in PRC reserves unseen since 1986. While this amount represents more than the reserves of most developing nations, it's not all that much in the grander PRC scheme of things when they still have an astronomical $3.89 trillion. Before modern China came around, Japan was the previous record holder with a then-unimaginable sum around the one trillion mark. Still, watchers of the tea leaves of PRC monetary policy have made much of a fuss. There are three versions of similar events here:

First, multinationals and others have become much less interested in
China as China has become much less interested in them. Direct foreign
investment for the first nine months of the year was down 1.4%. Moreover, the prospect for future months is not bright. Beijing’s
broad-based and prolonged attack on foreign companies has taken its toll
on sentiment...

And that brings us to the second reason for the unexpected Q3 outflow. Hot money looks like a, if not the,
main cause. Nathan Chow of DBS Group, in comments to Bloomberg,
attributed the drop to concern about “the not-so-great data for August.”
Moreover, during September the economy seemed to continue its downward
trend, and some of the statistics released in the last few days,
especially price data showing China to be in a deflationary environment,
confirm that suspicion. Tim Condon of ING Groep called the rush out of
China “a flight-to-safety for investors in September.”

2. The speculative version, deflationary pressures edition. Money supply growth is slowing as a result of fewer unsterilized capital inflows leaking into the mainland economy:

Now, as reserve accumulation goes into reverse, so too does the money
supply. M2 — which includes currency, checking deposits and some time
deposits — grew at just at 12.9% year-on-year for September, versus
14.7% year-on-year for June.

SocGen’s Edwards warns that China
faces a looming credit crunch and is already on a deflationary
precipice. China’s consumer inflation rate slowed to 1.6% in September,
down from 2% previously. The property sector looks to have
already begun the trip down: September marked China’s first year-on-year
fall in new-home prices, which declined 1.3% according to China’s
National Bureau of Statistics.

3. The official version, China's drop in foreign reserves is deliberate edition.

As a result of currency diversification, monetary authorities claim that mark-to-market losses on euros and other non-USD holdings are causing the drop in the recorded amount:

Guan Tao, the top official of the department of international payments
at China's State Administration of Foreign Exchanges (SAFE), said that
the recent drop in the nation's foreign-exchange reserves was not a sign
of capital flight; rather, it was basically because of the devaluation
of non-US assets.

Speaking of these movements being deliberate, PBoC officialdom also suggests lessened intervention to keep the yuan weak as another reason.

China's foreign
currency regulator is not concerned by signs of forex outflows, the
country's State Administration of Foreign Exchange (SAFE) said on
Thursday, saying a recent decline in forex reserves is in line with
China's policy goals...[Guan] also said that the central bank was gradually ceasing intervention in the forex market.

Obviously, these reasons are not mutually exclusive and can all be at play to some degree. Reserve accumulation on this level being unprecedented globally, China has also shown reluctance to cross thresholds, the current one being the $4 trillion mark. Reading too much into this drop in reserves is folly IMHO. Sometimes the official version of events is actually true (really). Unless these reserves drop precipitously in the months ahead, which I do not really expect, there are far more interesting things to talk about.

I obtained my doctorate in Political Science way back in 2008 at the University of Birmingham, in the UK's second largest city by population. A year before that, I began writing this blog which still survives (and thrives!) somehow. Despite three or four changes of academic affiliation since, the blog lives. However I am not exactly the most famous person associated with Birmingham, writing a blog in a somewhat obscure academic discipline. After being shot by crazed Taliban assassins in Pakistan while on board a school bus, Malala Yousafzai became a heroine to women being persecuted for desiring an education. A few days ago, she became the youngest Nobel laureate for winning the Peace Prize at age 17. It's a feelgood story Westerners like.

Going home being deemed to dangerous, Malala has since resettled in Birmingham, UK. I was of course aware of this, but what I was not aware of was how Malala is attending secondary school near the campus of the University of Birmingham at Edgbaston High School.

Pakistani schoolgirl Malala Yousafzai, who was shot in the head by the Taliban after campaigning for girls' rights to education, has attended her first day at school in the UK.
The 15-year-old was shot on a school bus in Pakistan in October.
She has now recovered following treatment at Birmingham's Queen Elizabeth Hospital.

She described starting at the city's Edgbaston High School for Girls as "the most important day" of her life.
She said: "I think it is the happiest moment that I'm going back to school, this is what I dreamed, that all children should be able to go to school because it is their basic right.
"I am so proud to wear the uniform because it proves I am a student and that I am living my life and learning."
Malala is in year nine and will start her GCSE curriculum next year.
She said she was looking forward to learning about politics and law.

Those of you who've been to Brum (our affectionate nickname for the town) know that Edgbaston is the more upscale, tonier part of the rather expansive University of Birmingham campus. The other part, Selly Oak, is the more--how do I put this--proletarian part of town. It is also where I stayed in student residence. One of the more curious memories I have about its location is that a fellow student from Pakistan also staying at Jarratt Hall was concerned about the security situation there [!] But hey, don't feel too sorry for us; another resident loved it so much that he's titled his latest trance album after our beloved student residence.

At any rate, the University of Birmingham was named "University of the Year" in 2013-2014. It's been trying to drum up attention in recent years and increase its academic rankings in the process--we're one of the world's top 100 universities in most surveys. Malala should consider that our rankings for the disciplines she's interested in are not too shabby, either: Brum ranks 13th in Political Science and 17th in Law.

Certainly, there's a hard-nosed persistence bred through living in a city lacking glamor--think of it as the Houston of the UK and you wouldn't be far off the mark. Yet, we thrive. It would also complete the circle for Malala: she received treatment for her injuries at the Queen Elizabeth Hospital on campus grounds and attends high school across the grounds of the aforementioned university. The only thing left for her is to study law or political science at the University of Birmingham ;-)

The cruel thing about the Ebola virus is that it infects those who care. Medical professionals, including nurses, are often most susceptible to infection for this very reason. When I first read that the nurse infected in Dallas, Texas was named Nina Pham, I immediately knew she was of Vietnamese descent. Fortunately, state-of-the-art facilities Stateside enabled her to fully recover and even meet President Obama. By now the image above has been beamed around the world. In part, it is of course propaganda to show the American public that the Ebola virus is something which need not debilitate society. After all, of the president could safely hug someone who was infected...

Visiting the White House and being hugged by the president shows part of the journey of Vietnamese-Americans in the US from being "boat people" to full-fledged members of American society. The story of resettlement in Texas is a particularly poignant one. After the Vietnam War, many South Vietnamese ultimately wound up in Galveston Bay and other parts of Texas, ostensibly because the warm, humid weather is reminiscent of Vietnam and coastal areas offered livelihoods in fishing they were familiar with. In part, such livelihoods offset the first-generation immigrants' lack of English comprehension:

Between 1975 and 1983, thousands of Vietnamese refugees crowded into
unseaworthy boats bound for Indonesia, Malaysia, Thailand, Hong Kong and the
Phillipines, and faced storms, starvation, disease, and piracy in the South
China Sea. Statistical data suggest that half of the Vietnamese "boat
people" died at sea. At a June 1979 United Nations conference on the
growing humanitarian crisis, the United States, Australia, Canada and France
agreed to resettle a total of nearly 700,000 [South] Vietnamese refugees.

In the United States, immigration agents asked Congress to scatter the
incoming refugees across the country in order to prevent "ghettoism."
This resettlement policy led to the creation of Vietnamese communities in states
such as Texas that had relatively little previous experience with Asian
Americans. In Texas, many of the new arrivals, facing language barriers and
having little capital, found opportunity in the Gulf Coast shrimping industry.
"We like the weather, we like the shrimping, we like a chance to start our
own businesses," one immigrant explained. Vietnamese fishermen and their
families pooled their savings and began to buy their own boats.

Many white fishermen in the area tried to ward off the competitive threat.
Vietnamese shrimpers found that they could purchase their boats only at a
considerable premium. "They got hustled pretty good," said an American
shrimper. The American fishermen pressured most of the local bait shops to
boycott the Vietnamese shrimpers. They also successfully lobbied in the state
legislature for restrictions on new shrimp boat licenses.

The white natives did not take kindly to the arrival of the Vietnamese. As chronicled in Bruce Springsteen's "Galveston Bay," resentful Ku Klux Klan sympathizers set Vietnamese fishing boats on fire as falling prices for catch and competition drove the white natives to violence:

The changing economics of shrimping made the competition even fiercer. The
increase in fishing activity in Galveston Bay reduced the available catch, while
a rise in imports kept wholesale prices low. Faced with this profit squeeze,
many longtime shrimpers went out of business. Others tried to compete by
streamlining and cutting costs. Some, however, took more drastic measures.

Between 1979 and 1981, several Vietnamese-owned shrimp boats were burned in
the Galveston Bay area - fires that arson investigators later determined had
been intentionally set. There were also reports of snipers firing shots across
the bows of Vietnamese boats. On the night of August 3, 1979, in the town of
Seadrift, several Vietnamese boats were burned and a vacant Vietnamese house was
firebombed, and a fistfight between white and Vietnamese fishermen ended with
the fatal shooting of a white crabber. Two Vietnamese were tried for murder and
acquitted on the grounds of self-defense.

Nina Pham, then, is a second-generation Vietnamese-American who has lesser experience of the discrimination which befell immigrants of her parents' generation as they struggled to escape the persecution of both the Communist ideologues and small-minded American racists:

Lifted from the seas by Chinese merchant ships and foreign navies, many
who were children still remember the terror and relief of resting on the
decks of Australian and Indonesian war vessels, while their parents
wondered if they would be processed and transferred to safety, or
returned to Vietnam to risk their lives another day.

Some in their late twenties are old enough to remember leaving Vietnam
in this way, as the world referred to the refugees as "Boat People," but
many of college age have experienced a different world most of their
lives. Born in the United States during the late 1970s and early 1980s,
they are sometimes embarrassed by the customs and traditions of their
parents and grandparents.

Unbeknownst to many of their children, following the American dream did not come easy for the immigrants. Uncertainty, resentment, and even violent and bitter conflict greeted
many of them in Texas, long after they left the aftermath of war in
Vietnam behind. In many cases, living in fear of their neighbors
characterized their daily lives.

Little is said of the hardships most faced after arriving in
resettlement camps and establishing new lives in American cities. Anglo
and African Americans talked of the "Asian Invasion" on radio dials and
some took drastic measures to reject the newest Americans.

Time moves on and this represents progress, I suppose, from earlier times.

Billy sat in front of his TV as the South fell
And the communists rolled into Saigon
He and his friends watched as the refugees came
Settled on the same streets and worked the coast they'd grew up on
Soon in the bars around the harbor was talk
Of America for Americans
Someone said "You want 'em out, you got to burn 'em out."
And brought in the Texas Klan

Mitsubishi needs no introduction as a Japanese conglomerate that has heavy industries for nearly everything under the sun aside from diversified interests from banking to brewing. Mitsubishi also has a measure of notoriety for building the A6M Zero fighter plane used for kamikaze attacks towards the end of WWII. During the postwar years, its sophisticated manufacturing facilities allowed it to produce F-15 fighters under license as well.

I bring up this bit of history since the Japanese are supposedly embarking on another episode of outdoing their American counterparts. Having long since consigned Detroit to oblivion, the Japanese are allegedly at it again, this time in aerospace as Mitsubishi builds its first jetliner for regional (read: short hop) use, the Mitsubishi Regional Jet (MRJ). What strikes me as curious about this Japan's-eating-America's-lunch story is that it comes 30 years after the heyday of Japan-bashing Stateside. Still, the parallels may be there in the US being unguarded about technology transfer. Just as American automakers laughed off Japanese "competition" way back when, the likes of Boeing and others in the aerospace field may be too lax:

Now history seems to be repeating itself – this time in America’s
ultimate manufacturing stronghold, aerospace. The politico-economic
dynamics are déjà vu all over again. The industry is officially
“targeted” by the Japanese government. And U.S. corporations seem to be
playing their allotted role to a T – as condescending, complacent
buffoons. Specifically Boeinghas been transferring key technology to Mitsubishi Heavy Industries
(MHI). The “heavy” in MHI’s name reflects the company’s nineteenth
century origins in shipbuilding but is a misnomer these days in that
the company is one of the most formidable behind-the-scenes players in
aerospace.

MHI’s hitherto most important claim to fame is as supplier of the
wings for the Boeing 787. [I'd argue it's making Zeros and F-15s, but anyway.] The 787 is the most sophisticated passenger
jet ever flown and its made-in-Japan wings are its unique selling
proposition: they are among the world’s strongest and lightest and thus
ensure that the plane achieves almost unheard of fuel efficiency. Much
of the basic technology was transferred to Mitsubishi by Boeing. Now
that that technology has been improved on by Mitsubishi, the Japanese
will almost certainly outclass Boeing going forward.

This weekend brought further news of Boeing’s folly. Mitsubishi has
launched its long awaited regional jet, which is available in both 70-
and 90-seater versions. If press reports are to be believed, Boeing has
helped Mitsubishi develop the plane. Certainly the new plane poses
immediate, potentially lethal competition for existing leaders in
regional jets such as Bombardier
of Canada and Embraer of Brazil. Mitsubishi is claiming a 20 percent
advantage in fuel economy and its planes will also provide passengers
with more legroom thanks to better seat design. Longer term it can be
assumed that just as the Toyota Lexus emerged to challenge the Cadillac,
full-size Mitsubishi jets will emerge to challenge even Boeing’s
super-advanced 787.

Speaking of Bombardier and Embraer, note that this segment is tightly contested, too. Like Airbus and Boeing going at it at the WTO, the Canadians and Brazilians also had their own WTO case with the Brazilians eventually prevailing in court.The thing about Mitsubishi entering this business so late is that it at least avoids the arguably more competitive A320/737-sized market dominated by Airbus and Boeing. The author also neglects to mention Airbus for a curious reason: are the Europeans chopped liver? Honda too has a much-hyped private jet. Still, I do not automatically predict Japanese domination of world markets for the main reason that we're talking about the Japanese.

Remember, Mitsubishi has barely made a dent in the global automobile industry, so I don't see why it should dominate the market for jetliners anytime soon.

This is a continuation of a previous post on the US wanting Chinese competition in development lending to just go away despite the likes of the World Bank and Asian Development Bank lauding the developmental benefits of competition. You know, when it comes to actual competition in development lending, the usual American BS, posturing and hypocrisy rear their ugly head. How will China's Asian Infrastructure Investment Bank survive? Depending on your point of view whether this is a good or bad thing, the US has largely succeeded in discouraging developed countries from pledging any funding to the PRC's brainchild. When th1e signatories gather tomorrow, not a one is going to be a developed country. Australia which the PRC courted is playing dumb, for instance:

U.S. officials have attempted to sway countries not to join, publicly
raising concerns about China’s ability to ensure international
standards of governance at the institution. No developed
countries will be present on Friday, according to an Indian government
official. India will sign the agreement—a step toward the later formal
establishment of the bank—along with roughly 20 other countries from
across Asia, the official said.

Beijing was betting on the
participation of Australia, a major trade partner which relies on
Chinese demand for its natural resources and is currently negotiating a
trade pact with China. An Australian government official said the
country hadn’t decided whether to join and was unaware of the agreement
to be signed Friday.

The Americans and their lackeys naturally express doubts and pooh-pooh the effort in demanding US-style conditionalities and whatnot:

U.S. Treasury Secretary
Jacob Lew
,
at a conference earlier this month in Washington, raised concerns
about whether the bank would adhere to international lending norms such
as those followed by the World Bank. “The critical question is,
‘Do they follow the same kinds of practices that are working to help
economies grow and to maintain strong and stable foundations?’” Mr. Lew
said.

A Japanese finance ministry official said the country
wouldn’t join because it sees no need for an alternative to the Asian
Development Bank, which is dominated by Tokyo. Japan also has concerns
about governance and transparency issues at the new bank, the official
said. South Korea hasn’t decided whether to join and is still
“looking at the governance and decision-making process” as well as the
“economic benefit,” a government official said.

That said, Southeast Asian nations with the exception of Indonesia have signed up to the program These include Philippines and Vietnam which have heated territorial disputes with China. Apparently, the lure of increased infrastructure funding with fewer strings attached was too hard to resist for these countries with large and growing infrastructure needs:

India will be the only large economy to sign up to the
Chinese initiative at the ceremony in the Great Hall of the People in
Beijing on Friday morning, according to people familiar with the matter. It will be joined by Mongolia, Uzbekistan,
Kazakhstan, Sri Lanka, Pakistan, Nepal, Bangladesh, Oman, Kuwait, Qatar
and all of the Association of Southeast Asian Nations except Indonesia. Indonesia excused itself from being involved
at this stage, saying the newly installed government had not yet had
time to consider Beijing's proposal.

Money talks, I guess, and more than a few are willing to give China a chance if it really is opening up its wallet. Speaking of "governance," the irony is that the Chinese are establishing their own development lender with a catchy refrain on infrastructure development precisely because the West and countries friendly to it (read: Japan) have refused to accommodate changes in the world economy since the turn of the millennium. As for China, the interesting thing to watch is whether there will be real participation allowed among the other countries signing up to this venture as opposed to being National People's Congress-style rubber stampers. Alternatively, they may be treated like Hong Kong administrators--serfs in all but name.

UPDATE 1: David Dollar (no relation to Eddie Money), formerly of the World Bank, lauds the creation of the AIIB in a New York Timesop-ed. He too harps on the value of competition:

But as the new bank will also try to be leaner and faster than the
existing banks, it will provide some healthy competition. And hopefully
the success of the bank will encourage more rapid reform of the old
institutions [i.e., the World Bank and ADB]. That would be the best global outcome of all. If we want
China to buy fully into the existing institutions, then we have to give
it the seat at the table that it deserves.

UPDATE 2: More on today's event in Beijing--who was there who was not:

But other than China, among Asia's 10 largest economies only India and Singapore signed the AIIB memorandum, with three of the top five--Japan, South Korea and Indonesia--notably absent.
The Japanese head of the Asian Development Bank, another regional lender, said Thursday that questions remained over the AIIB's structure and it needed to adhere to international standards.
"Our position about AIIB is first that it is understandable because there is a very big financing need in the region," ADB President Takehiko Nakao told reporters.
But he said he was still awaiting details about the bank such as membership, shareholdings, the location of its headquarters and who will head it.

An area of study in international relations that nobody has looked at is this one: countries locked in disputes engaging in travel warnings against each other. Since most countries today are WTO members, using discriminatory measures against others' products and services is more difficult to do than in the per-WTO period. So, how are you going to get back at the offending party? Try travel advisories warning that the country in question is some kind of godforsaken hellhole where terrorism is rampant and the rule of law is an illusionary concept.

As it so happens, China has been a particularly avid user of travel warnings against all and sundry transgressors of the will of the Chinese people (or at least the Communist Party). Locked in territorial dispute with the Philippines over its, ah, expansive claims to huge swathes of the South China Sea, the PRC is hitting the Philippines where it hurts. You see, the Philippines is targeting 10 million visitors by 2016 and is using its "It's More Fun in the Philippines" campaign to ramp up foreign interest in it as a tourist destination. Anyway, back to the killjoys...

In its advisory, the Chinese Ministry of Foreign Affairs cited a
"worsened security situation in the Philippines" that may see Chinese
nationals targeted. It followed an alleged bomb plot against the
Chinese embassy, the kidnapping of an 18-year-old man in the southern
Philippines and general concern about criminal gangs.

The Philippine military has since dismissed the alleged bomb
plot, noting that the man arrested was a fringe politician whose bombs
were merely firecrackers, and the Chinese embassy has yet to determine
if the kidnapped man was indeed a Chinese national.

Aileen Baviera, a professor who specialises in
Philippine-China relations at the Asia Center of the University of the
Philippines Diliman, said it seemed hard to justify the advisory. "There are so many Chinese in the Philippines, they're all over the country. So these are really isolated incidents," she said.

As you would guess, the reasons cited are, well, specious. The real reason, most commentators would agree, is to get back at the Philippines with minimal international repercussions over this tinpot banana republic taking it to court over territorial disputes. So, trade-related measures are out, but travel warnings are certainly fair play:

But the advisory was issued amid high tensions between Beijing and Manila over territorial disputes in the South China Sea and is widely seen in the Philippines as going beyond Beijing's security concerns for its tourists. "Hyping up the danger to their own nationals in the
Philippines is one way that they [Beijing] put subtle pressure on the
government," Ms Baviera said.

There's no doubt about it: the Chinese are playing hardball given the suspect timing:

China issued a similar travel advisory in 2012, at the height of a
stand-off at the Scarborough Shoal - a reef claimed by both Beijing and
Manila. That time, it cited a protest planned outside the Chinese
embassy in Manila. Of the 1,000 protesters expected by the Chinese
embassy, only about 200 showed up, and anti-Chinese violence did not
materialise.

The new fall in tourists has already had an economic impact.
China is the fourth largest source of foreign tourists in the
Philippines, after South Korea, the United States and Japan. Chinese tourists spent 6.46bn pesos (£89.5m; $144.7m) in the
country between January and August 2014, according to a report by the
Philippine Department of Tourism.

Despite Cuba's (largely US-imposed) isolation from the rest of the world for the sin of being Communist...at least in the Americas when the US has long since cottoned up to the likes of China, Vietnam, and other so-called Reds, its medical system has remained one of the world's best against all odds. The World Health Organization (WHO) lauds it as being a model for the world, while even citizens of its oppressor nation say it is "unreal" in care being free yet of high quality. So much so that it has exported doctors in exchange for petroleum.

I am of two minds about Cuba. While I do believe that the US has unfairly singled it out for sanctions in an age where it no longer views being socialist as grounds for isolation, Cuba's leadership has a lot to answer for in keeping the country in a time freeze (medical care aside). That said, it does what it can to take up an international role--especially among developing countries. The brothers Castro chaired the Non-Aligned Movement from 1978 to 1979 and again from 2006 to 2009.

Naturally, a way Cuba has built its international influence is by sending medical missions abroad. Heck, there's even an entire Wikipedia post on "Cuban medical internationalism" detailing instances of such aid being sent when crises occur abroad. Always being in touch with the times in this regard, we now have the superannuated Fidel Castro vowing to dispatch Cuban medical professionals to the Hot Zone itself during the current Ebola outbreak. With characteristic Latin brio, he writes that "the hour of duty has arrived" as the UN has called on Cuba to make a contribution to the Ebola containment effort:

The medical professionals who travel to any location whatsoever to save lives, even at the risk of losing their own, provide the greatest example of solidarity a human being can offer, above all when no material interest whatsoever exists as a motivation. Their closest family members also contribute to such missions what they most love and admire. A country tested by many years of heroic struggle can understand well what is expressed here.

Everyone understands that by completing this task with maximum planning and efficiency, our people and sister peoples of the Caribbean and Latin America will be protected, preventing expansion of the epidemic, which has unfortunately already been introduced, and could spread, in the United States, which maintains many personal ties and interactions with the rest of the world. We will happily cooperate with U.S. personnel in this task, not in search of peace between these two states which have been adversaries for so many years, but rather, in any event, for World Peace, an objective which can and should be attempted.

In an op-ed, the New York Timesnotes it is partly self-aggrandizement and grandstanding driving the Cuban effort, but at the end of the day, there is no denying that Cuban medical professionals are knowingly placing themselves in grave danger, and that the US should at least acknowledge the risks they are taking by offering support:

It
is a shame that Washington, the chief donor in the fight against Ebola,
is diplomatically estranged from Havana, the boldest contributor. In
this case the schism has life-or-death consequences, because American
and Cuban officials are not equipped to coordinate global efforts at a
high level. This should serve as an urgent reminder to the Obama
administration that the benefits of moving swiftly to restore diplomatic relations with Cuba far outweigh the drawbacks.

The
Cuban health care workers will be among the most exposed foreigners,
and some could very well contract the virus. The World Health
Organization is directing the team of Cuban doctors, but it remains
unclear how it would treat and evacuate Cubans who become sick.
Transporting quarantined patients requires sophisticated teams and
specially configured aircraft. Most insurance companies that provide
medical evacuation services have said they will not be flying Ebola
patients.

Secretary
of State John Kerry on Friday praised “the courage of any health care
worker who is undertaking this challenge,” and made a brief
acknowledgment of Cuba’s response. As a matter of good sense and
compassion, the American military, which now has about 550 troops in
West Africa, should commit to giving any sick Cuban access to the
treatment center the Pentagon built in Monrovia and to assisting with
evacuation.

The
work of these Cuban medics benefits the entire global effort and should
be recognized for that. But Obama administration officials have
callously declined to say what, if any, support they would give them.

As ever, I am in favor of immediate US removal of antiquated sanctions against Cuba dating from the Cold War. While they are partly to blame for their isolation, a certain neighbor has deepened and prolonged it beyond reason.

Whereas Osama bin Laden struck me as a po-faced fanatic, Venezuelan Carlos the Jackal always had an ironic streak to him. At the height of his infamy, his pseudo-socialist leanings gave lie to his high living nature as a self-styled "professional revolutionary." The contradictions inherent in Carlos the Jackal are what make him interesting in a manner that eluded bin Laden. The latter was simply a blowhard, whereas the former always had a nudge and a wink ready. As he jetted from one America-hating safe haven to another the world over in between (attempted) acts of terrorism against the West, his actual threat was well-exceeded by his inflated self-image. This was a guy caught, after all, after France effectively bought off the Sudanese. For all that, I hardly think anyone is going to make a five-and-a-half-hour biopic of Osama bin Laden. (And, unlike the movie actor, the real Carlos was always on the chubby side.)

Recently, Carlos the Jackal resurfaced again as his French captors made him stand trial for another terrorist incident in France from long ago. He isn't so young anymore, but he displayed some of the panache that made him the world's most famous terrorist--which he ironically is once more after the killing of bin Laden--wearing a Russian ushanka hat with the flaps tied up while appearing in court late last year. (He didn't get expelled from the Soviet-era Patrice Lumumba Friendship University for nothing.) Now, he's back:

An investigating judge specialising in anti-terror cases had ordered the latest prosecution, French newspaper Le Figaro reported on Tuesday. Ramirez, 64, had admitted carrying out the 15 September 1974
attack on the Drugstore Saint-Germain in an Algerian newspaper five
years later, French media said. He has already been given a life sentence for killing 11
people and wounding another 150 in four attacks dating back to the early
1980s:

In March 1982, a bomb exploded on a train between Paris and Toulouse, killing five people and wounding 28

A month later a car bomb attack was mounted on an anti-Syrian newspaper in Paris, with one passer-by killed and 60 injured

On New Year's Eve 1983, a bomb on a TGV fast train between Marseille and Paris killed three people and wounded 13

A bomb at a Marseille train station killed two

Ramirez has also been linked to several other attacks outside France.

bin Laden's successors at the Islamic State in Iraq and the Levant (ISIL) are even more pointlessly bloodthirsty than he ever was. Carlos the Jackal was from a different age when targets were more Western ones and socialist fervor was more the cause. That is, the "international workingman" was a broad church where people of different ethnicities could work against bourgeois oppressors. With the fundamentalists, it's simplified into a "you're either with or against us," Muslims against infidels struggle.

David Byrne should be familiar to 80s music fans as the Talking Heads frontman of "Burning Down the House" fame. Together with Fatboy Slim, they have turned their 2010 double concept albumHere Lies Love loosely based on the life story of Imelda Marcos into a London musical. (I've listened to the album and it's far from an audio biography of the Imeldific one's life story.) Never far away from the headlines, Mrs. Marcos recently returned to the limelight when the Philippine government seized artworks allegedly by Picasso, Gaugin and others. (She recently denied they were purchased using money looted from government coffers.)

Fortunately, the musical makes itself clear on being about Imelda Marcos by adding a number of biographical details which plot her rise from obscurity to global icon and the downfall which came. To be sure, some details do not quite ring true as you'd expect from two rich white guys envisioning what happens in a poor country, but they're close enough. I've been following the development of this musical for some time, including the casting call in Manila for additional actors. Even musicals, however, are subject to innovation: Melding Mrs. Marcos' love for disco dancing and Filipinos' penchant for Catholic religiosity was bound to have interesting consequences, and the musical seems to deliver on this front. Imagine, then, Philippine history as dancefloor extravaganza:

It takes Imelda and Ferdinand Marcos – for a while, the Asian Kennedys,
then more akin to the Ceaucescus in their tyrannic corruption – from
Imelda's 1950s rise from the humiliatingly poor side of a family of
consequence through to the moment in 1986 when – after 14 years of
Martial Law and a short entirely peaceful People Power Revolution – the
couple were airlifted out of the country by US marines. The rescue is
realised here in a juddering frenzy of white light: Close Encounters
crossed with a berserk parody of Pentecost. Imelda's epic partiality to
shoes was only discovered subsequently (1060 is the attested number
found) and it's typical of the strange, admirable rigour of the piece
that its makers have forborne to make capital of the phenomenon.

As for the political economy of it all, how does Here Lies Love compare to the benchmark for these things, Andrew Lloyd Webber's Evita? At this point there is no real standout number like "Don't Cry for Me Argentina," but the newer production may benefit from being more attuned to historical circumstance and observation of power dynamics in the rise and fall of Imelda. (Perhaps "Rose of Tacloban" gains resonance after the devastation wrought on Imelda's hometown during Typhoon Haiyan.)

The inescapable comparison is with Evita. Here Lies Love is, to my
mind, politically cannier and sharper about the queasy, telling overlap
between manipulative-diva worship on the musical and on the political
stage.

And it moves to its devastating conclusion through the
artfully deployed metaphor of disco – one of Imelda's passions in her
spendthrift sojourns in the Big Apple. Overhung by a vast glitterball
(she had one in her New York townhouse), the Dorfman [Theatre] has been
transformed into a churning, thumping miniature Studio 54.

The
packed punters on the ground level are chivvied and manouevred by a live
DJ and his helpers around adaptable acting areas: among them, a squatly
cruciform central platform, handy for preening photo-ops

I've attended a fair number of musicals. In none of them have they asked you to, well, get up and dance. As a production in a capitalist economy, audiences are in constant need of novelty. Why not be part of a live disco act about Imelda Marcos replete with DJs in full Studio 54-style pomp? It's an intriguing concept that may herald more musicals eliciting more active audience participation.

Interesting stuff. When Mrs Marcos' days on earth come to and end, her tombstone will read, "Here Lies Love."

Chevrolet is "Like a Rock"? Man U makes itself into a global punch line (again).

When I contemplate the largest follies of sports sponsorship, one name immediately comes to mind, "Manchester United." It takes the cake by some margin even if the competition has become more intense. I have written at some length about the dastardly activities of the Ameriscum Glazer clan which saddled this once-solvent sports team with boatloads of debt after they bought it via leveraged buy out (LBO). They say that misery loves company, and one of the "benefits" the Glazers have brought to Manchester United are American shirt sponsors of the equally dodgy sort.

In a world infested by hellishly daft shirt sponsors, Manchester United took the cake by having fellow American--let me repeat that for emphasis--American Insurance Group (AIG) as shirt sponsor when it imploded spectacularly because of its nefarious activities involving the sale of credit default swaps (CDS) as the US subprime crisis went into full swing. As defaults on subprime real estate-linked assets AIG's London subsidiary sold protection on collapsed, it took down the US mothership. So, the football team was made into a laughingstock as they could not remove AIG from its kit since the deal to sponsor AIG was still in place despite the firm collapsing.

He was smart enough to leave Man U to save the embarrassment of wearing this shirt.

Fast-forward a couple of years later and Manchester United's owners decided to take on another Yanqui laughingstock. In the years between they took AON, a respectable political risk insurer. Not having learned their lesson from the AIG, however, they subsequently took on the General Motors brand Chevrolet. When it comes to corporate social responsibility (CSR), what's worse? AIG underwent the largest government bailout in US government history, wasting colossal amounts of taxpayer money. Meanwhile, the newswires are now plastered with stories about various lawsuits against GM amounting to billions for customer injuries and fatalities. So, Manchester United's penchant for bad press has indeed moved on--from corporate collapse over dodgy dealings to, well, killing the customer:

At least 27 people have died and 25 people have been seriously
injured in crashes involving General Motors cars with defective ignition
switches. Attorney Kenneth Feinberg, who was hired by GM to compensate victims, updated the totals Monday. Feinberg says he has received 178 death claims since August. Of those, 27 have been deemed eligible for compensation payments.

Twenty-five of the 1,193 injury claimants have also received compensation offers.
GM knew about faulty ignition switches in Chevrolet Cobalts and other
small cars for more than a decade but didn't recall them until February
of this year. The switches can slip out of the "on" position, which
causes the cars to stall, knocks out power steering and turns off the
air bags. Feinberg will accept claims until Dec. 31.

Tragic as it may be, you can't make this stuff up. If you need some ugly Americans, I've got some of the ugliest for you right here as they all flock to a British football team for some strange reason.

Supposedly paying Lotus $40m/year for a non-competitive drive is only the start of Venezuela's folly.

Amidst the wider economic turbulence worldwide, among the very first to get hit are energy exporters with very high production costs for obvious reasons. Dependence on energy revenues amidst an oil rout ensures that state coffers are being depleted--especially when your breakeven price is high. The poster child for national mismanagement--dwindling production, inefficient technology, and politicization of oil funds is, of course, Venezuela's state-owned oil companny PDVSA which features all these things and worse. For a supposedly socialist nation, the ultimate bourgeois folly is sponsoring F1 driver Pastor Maldonaldo at the enfeebled Lotus which currently lies 8th of 11 in the constructors standings. In the pit paddock, ol' Pastor has a reputation for being a nutter, and the leader who bankrolls him is no different.

Economists Carmen Reinhart and Ken Rogoff wading into the fray has sparked another round of debate on Venezuela's fate. Their colleague, Venezuela-born Harvard economist Ricardo Hausmann--he of "deficits don't matter since dark matter makes US deficit disappear" infamy--actually seems to offer a less fantastical analysis of his home country. Apparently, deficits seem to matter in Venezuela, or he was at least chastened by the global financial crisis that came after his "dark matter" flight of fancy. Don't ask me to explain; it's a Venezuelan thang. Anyway, here are Hausmann's colleagues coming to his defense:

It is unclear whether Maduro, who called
for Venezuela’s authorities to take unspecified “action” against
Hausmann and Santos (both Venezuelan citizens), was more offended by the
suggestion that his government should default on external debt, or by
the authors’ list of all the other ways it has already defaulted. These
include the government’s $3.5 billion unpaid bill for pharmaceutical
imports, payment arrears of more than $2 billion for food, and nearly $4
billion owed to airline companies. Oil production has more than halved
since 1997, in no small part because the state-owned oil company has
repeatedly defaulted on suppliers and joint-venture partners.

Predicting a Venezuelan default in the near future and actually encouraging this course of action has not endeared Hausmann to the bus driver taking Venezuela down the highway to hell, Nicolas Maduro:

The suggestion that the country stop servicing its bonds
comes a month after Harvard colleagues Ricardo Hausmann and
Miguel Angel Santos wrote that Venezuela should consider
defaulting given that it was piling up arrears to importers.
Venezuela owes about $21 billion to domestic companies and
airlines, according to Caracas-based consultancy Ecoanalitica...

“People are beginning to see that a sensible strategy for
the government is to default,” Joaquin Almeyra, a Miami-based
bond trader at Bulltick Capital Markets, said in an e-mailed
response to questions. “And oil below $90 complicates things.”

If you like financial adventure, buy some Venezuelan sovereign debt:

Venezuelan debt is the riskiest in the world, yielding
16.07 percentage points more than Treasuries, according to data
compiled by JPMorgan Chase & Co. The cost to insure the
country’s bonds against default with credit-default swaps is
also the highest for any government globally. “Given that the government is defaulting in numerous ways
on its domestic residents already, the historical cross-country
probability of an external default is close to” 100 percent,
Reinhart and Rogoff wrote in their article.

What is Maduro's retort to Hausmann? His predictably feeble-minded response is to dub the Harvard economist a financial "hit man" after a really bad conspiracy theory book. But alas, the day of reckoning is nigh since crammed into the end of 2015 is a logjam of payment dates that should deliver Venezuela to the gates of insolvency:

President Nicolas Maduro dubbed Hausmann a “financial hit
man” and “outlaw” and instructed the attorney general and
public prosecutor to take “actions” against the Venezuelan-born professor for seeking to destabilize the country...

There is little risk of an immediate default in Venezuela,
Sebastian Briozzo, director of sovereign ratings at Standard and
Poor’s, said today in an interview at Bloomberg headquarters in
New York. Last month, the ratings company lowered Venezuela’s
credit rating to CCC+, which implies at least a 50 percent
chance of default over the next two years.

“Once we get closer to the end of next year, the situation
could become more difficult,” Briozzo said. The government is
prioritizing debt payments because it needs foreign investment
to expand oil production, he said.

I do not quite understand the logic of the leftist nutter Maduro. Why is he out to attract foreign investment from foreigners in hopes of boosting production? Can't the great socialist people of Venezuela be inspired by the great Simon Bolivar to sort the matter out for themselves instead of relying on the capitalist imperialists? Moreover, if he really wanted to stick it to these dumb foreigners who think they know better, he should screw them over ASAP by paying them nothing, nada, zip, zilch, Argentina style.

Viva la revolucion! Viva Nicolas Maduro! Viva Pastor Maldonaldo too while we're at it! If nothing else, a guy who recklessly drives into other cars week in and week out is nothing if not an excellent representative for Venezuela's crash wreck of an economy.

Hot on the heels of Russia intervening in the currency markets to no real effect, we receive word that it is using legal maneuvers to resume being able to obtain financing from Western capital markets which have been closed to the country ever since a new round of sanctions were implemented by the European Council (the "upper house" of European Parliament composed of EU heads of state) in the wake of the downing of the Malaysian Airlines jetliner. The troubles in Ukraine continue to roil, especially if the Russian state-owned enterprises are unable to roll over their debts coming due at the end of next year:

The EU bans, with similar measures adopted by the US, have all but frozen Russian companies and
banks out of western capital markets, at a time when they have to
refinance more than $130bn of foreign debt due for redemption by the end
of 2015. Rosneft
filed a case against the EU’s European Council in the general court
under the European Court of Justice on October 9, requesting an
annulment of the council’s July 31 decision that largely barred it and
other Russian energy companies and state banks from raising funds on
European capital markets.

Russia is counting on the precedent of ECJ rulings that have rolled back sanctions against the likes of Iran and Syria. That said, those countries hardly have become welcome participants in European capital markets--not by a long shot. In this vein I'd say it's more like a speculative ploy to obtain some breathing room as Russian finances get shot:

The
challenges follow verdicts that have gone against the council in
relation to similar measures imposed on Iran and Syria. In particular,
the court has ruled that in implementing sanctions, European states have
been too reliant on confidential sources, which impair the targets’
ability to mount an effective defence.

Rosneft seeks to "liberate" a grab bag of crony capitalists, mostly state-owned banks that provide it with working capital:

Rosneft’s request was filed on behalf of the company itself and other unidentified parties.

The capital markets sanctions that the company wants overturned also affect Russia’s biggest state lenders Sberbank, VTB, VEB, Gazprombank and Rosselkhozbank, as well as Gazpromneft, the oil arm of the state gas monopoly, and Transneft, the state-owned pipeline monopoly. Rosneft, Rosselkhozbank and Sberbank declined to comment. VTB said it
had not made a final decision with regard to legal action over the
sanctions. “We are carefully studying this issue and taking legal
advice,” the bank said.

As the song goes, Russia has now sent the lawyers in after dabbling with guns (military adventurism in Ukraine) and money (feebly trying to staunch ruble devaluation). I guess these self-styled tough guys who can "stick it to the West" are not as badass as they portray themselves to be, having withdrawn massed forces on Ukraine's border and now resorting to legal chicanery in the interest of economic survival.

As I said earlier, it turns out that the West has Russia by the balls and not the other way around as energy prices drop precipitously. $400+ billion in reserves can go quite quickly when your burn rate is as phenomenal as Russia's at the moment.

As far as Europeans go, Norway has a maverick, independent streak. It is not a member of the European Union, let alone a user of the euro. Unlike most of its neighbors, it has a petroleum-based economy. The latter has given rise to a fairly sizable sovereign wealth fund (SWF) officially known as the "Government Pension Fund Global" as oil proceeds have been saved over the years. Depending on the source quoted, its holdings range from $820 billion to a cool $890 billion--supposedly worth $178,000 for each Norwegian. [Can I retire as a Norwegian?] As you would expect from these smart, non-subprime-loving folks, it is a well-run SWF to boot.

Critics, however, point to its preference for investing mostly in the developed world where returns are rather lower. You can see this from the nifty interactive map on the SWF's site. However, this criticism has not dissuaded it from buying more blue-chip properties all over the world in accomplishing their version of "diversification." Take, for example, the United States:

Norway has vaulted to the top ranks of foreign U.S. commercial real estate buyers as its $870 billion sovereign-wealth fund, the world’s largest, acquires buildings from New York to San Francisco. The
country has spent more than $3.2 billion on U.S. real estate this year,
including the assumption of debt, according to research firm Real
Capital Analytics Inc. and statements from the wealth fund. That makes
it the biggest international buyer after Canada. The total is more than double the amount spent in all of 2013, when Norway ranked No. 6 for property purchases.

Norway, which has a smaller population than New York City,
is spending billions of dollars on properties globally as its wealth
fund seeks to meet a target to invest as much as 5 percent of its assets
in real estate. In the U.S., prices for top-quality buildings in major
markets are being driven up by foreign funds that often are willing to
accept lower yields than domestic buyers in return for a safe place to
put their money, according to research firm Green Street Advisors Inc.

“There’s an element of perceived safety in a hard asset in the United States, in New York City, that is harder to replicate in other alternatives,” said Michael Knott, a managing director at Newport Beach,
California-based Green Street. Investors such as the Norwegian fund
“have the ability to hold indefinitely and probably not be troubled at
all by a low going-in yield.”

In a sign of the times, Norway is even buying prime London properties from Singapore's SWF:

Norway’s sovereign wealth fund, the world’s largest, agreed to buy the Bank of America (BAC:US) Merrill Lynch Financial Centre in London for 582.5 million pounds ($944 million) as it expands its bet on the U.K. capital.

The
fund acquired the 585,000 square-foot (54,000 square-meter) office
complex at King Edward St. from GIC Pte, Singapore’s wealth fund,
Oslo-based Norges Bank Investment Management said today in a statement.
GIC bought the property from Merrill Lynch & Co. Inc. in 2007 for
480 million pounds.

Norway’s $860 billion wealth fund formed a
new real estate group in July to speed up its property investments and
is seeking to invest almost $10 billion annually over the next three
years. The fund owns properties on Times Square in New York and the
Avenue des Champs-Elysees in Paris, as well as in Boston, San Francisco
and Zurich.

Norway's $840-billion sovereign
wealth fund purchased a 94.9 percent stake in several firms that
own two office buildings in Munich's Lenbach Gärten quarter, the
fund said on Tuesday. The fund purchased the stakes from AM Alpha GmbH for a total
consideration of 176.1 million euro, including 75 million euro
of third-party debt, it said in a statement.The buildings have 29,000 square meters of total leasable
area and are primarily leased to McKinsey & Company Inc. and
Condé Nast Verlag GmbH.

I've been to Norway twice and had a Norwegian boss to boot. They are easygoing but highly focused folks, so I'm sure their real-estate investments have been thought through. In this day and age, investors for the long haul are to be welcomed like the Norwegians.

Environmentalist activists are not infallible despite being ostensibly well-intentioned. Common failings include impractical courses of action as well as those which actually make the situation worse. With regard to the latter, Greenpeace has some history with energy titan Shell. In 1995, Greenpeace singled out Shell for the planned sinking of an exhausted oil platform, Brent Spar. Greenpeace argued that it was better to bring the platform on land and dispose it from there at considerable additional expense. After making a huge racket, Shell eventually bowed to the environmentalists. However, this action was foolish and misguided. In a study published in the prestigious journal Nature, it was explained how sinking the platform into the sea as originally planned was actually the ecologically-friendly alternative:

However, the true scandal may have never made it to the public: In June
1995, a study was published in the scientific journal “Nature”. This
study stated that the impact on the environment by sinking the Brent
Spar would have been minimal and the authors even said it would have
been a gift to the eco-system. In September 1995, Greenpeace had to
publish publicly that the 5,500 tons of leftovers of oil they assumed to
be in the Brent Spar, was too much. In October 1995, the assessment of
the Brent Spar by a Norwegian independent institution found that it was
only 75 to 100 tons of oil. This is 1.36% – 1.82% of the amount assumed
by Greenpeace. In retrospective, it seems to be true that sinking the
Brent Spar would have been the best option, also ecologically.

Good job, Greenpeace. Nowadays, we have "Brent Spar Round 2" as Greenpeace has singled out Shell again for its role in Arctic drilling and targeted Lego for creating toy sets which feature Shell gas stations and the like via a viral YouTube video. Always loving irony, the WSJ feature on this incident was preceded by--you guessed it--a Shell video playing up its alternative energy portfolio (see picture above). Anyway, on to the matter...

A 1-minute, 45-second video has ended a long-term relationship between Lego and Royal Dutch Shell. The Danish toymaker said today
that it will not renew a co-promotion deal with Shell, after a
Greenpeace video linking Lego with the oil company’s Arctic drilling
program went viral.

The video,
which shows an Arctic landscape built of Lego blocks being swallowed up
in a pool of black oil, “may have created misunderstandings among our
stakeholders about the way we operate,” Lego Chief Executive Jørgen Vig
Knudstorp said in a statement. Greenpeace has been pressing Lego to end a
partnership signed in 2011, in which co-branded Lego toy cars are sold
at Shell stations in some countries.

Greenpeace, in a statement
on its website, called the decision “fantastic news.” In a statement
issued by its London press service, Shell said it did not comment on
contractual matters. “Our latest co-promotion with Lego has been a great
success and will continue to be as we roll it out in more countries
across the world,” the statement said.

I myself have some distaste for Arctic drilling, but I certainly don't think that targeting Lego is ideal. After all, remember that Lego pieces are made of acrylonitrile butadiene styrene (ABS). ABS is a petroleum-based product, i.e. a "petrochemical" derived from fossil fuels.

Lego disowning petroleum-based products is like McDonalds disowning meat production. Ironic, and worst of all, dumb. First off, Greenpeace should not have targeted Lego, a marketer of petroleum-based products. Second, Lego was doubly stupid to give in since it undermines the whole business model of selling petrochemical-based toy elements. Makes you sad, doesn't it?

The trouble with being a commodity-dependent country is that putting all your eggs in one basket is bound to have deleterious effects when downturns in the prices these commodities command occur. Unfortunately for Russia, its worst downturns coincide with steep falls in commodity prices. In 1998 when it famously went to the IMF poorhouse, oil prices were around $18 a barrel. $20/bbl oil! It almost makes you wish China didn't grow so much, but being a charitable sort, I am thankful for all those Chinese lifted out of poverty over this time. The Russians were also rather grateful as Vladimir Putin became Russian president shortly thereafter, erasing the memory of the traumatic Boris Yeltsin years.

Fast-forward sixteen years and it is Putin's turn in the hot seat. As if ill-advised military adventurism and sanctions weren't enough to deal with, recent evidence of the global economy slowing down is causing oil prices to decline anew. Sure $88/bbl oil doesn't sound so bad compared to $18/bbl oil for producers, but the trouble is that Russian production costs have risen since way back when since it doesn't exactly have Western levels of efficiency. What's more, expectations for turning a profit selling oil overseas was predicated on a rather higher market price. As of last year, it was...

Russia will probably require an average Brent oil price of
$117.8 a barrel this year to balance its budget, the fifth
straight year it’s needed crude above $100 and compared with
break-even prices of $90.3 for Saudi Arabia and $65 for
Kazakhstan, Deutsche Bank AG said in a May 10 report.

This sets the stage for what's happening to Russia at the moment. In advance of the damage sanctions will cause as well as lower oil prices, the ruble has plummeted. Simultaneously, the central bank has been intervening in a big way to stem the currency's downward spiral. How "big"? Try $6 billion for starters:

The ruble extended its longest losing streak in more than a year as
$6 billion of Russian currency interventions failed to stem the
depreciation amid tumbling oil prices. The ruble weakened 0.6
percent versus the dollar-euro basket to 45.3303 by 6 p.m. in Moscow,
taking its seven-day decline to 2.3 percent, the longest stretch of
losses since the nine days ended Aug. 1, 2013. Oil, which along with
natural gas contributes almost half of Russia’s revenue, fell 2.2
percent to $88.21 per barrel in London, the lowest since December 2010.

Russia’s central bank intervened in the past 10 days to stabilize the currency, central bank Governor Elvira Nabiullina told lawmakers in Moscow today. The action, which comes as President Vladimir Putin
orders a withdrawal of Russian forces from Ukraine’s border, has failed
to halt the ruble’s drop amid a domestic foreign-currency shortage
stemming from sanctions. The cost to swap rubles into dollars widened to
a record, while wagers for interest-rate increases climbed to a
six-year high.

The main driver for the ruble right now is the oil price,” Dmitry Polevoy,
the chief economist for Russia at ING Groep NV, said in an e-mailed
note. Crude’s decline “totally eclipses” the “reassuring news” that
Russia announced it was pulling back forces from Ukraine’s borders, he
said. The ruble slid 0.9 percent to a record 51.3120 versus the euro and lost 0.3 percent to 40.4350 against the dollar.

Russia's $400 billion-something reserves sound impressive until you hear about the rate they're burning cash. I am not entirely surprised that they've pulled back troops from the border with Ukraine with few histrionics. Apparently not even mighty Russia can buck Western hegemony circa 2014. As its currency drops and drops without end in sight, the interim verdict is inevitable -